Growth of renewables: The cost of extracting energy from solar and wind resources is nearing parity with fossil fuels. Our analyses suggest that solar and wind may be 30 percent cheaper than coal and gas by 2035. That sets the stage for an irreversible decline in hydrocarbon consumption. By some projections, hydrocarbons’ dominance in the energy mix will fall from 80 percent today to just above half by 2060.

In this new paradigm, upstream returns will be less significant than in the past. Oil and gas companies will need to extend their reach into other parts of the value chain. To do so, they must transform their core capabilities. Equally important, they need to re-imagine where they compete and how they harness growth.

As disruption flips the energy industry on its head, oil and gas companies have the chance to flip their fortunes.

Transforming the core

Size, scale or asset-recovery capacity will no longer give oil and gas companies a competitive advantage. Success will require them to maximize the value of every molecule, embrace digital technologies, and work within ecosystems to deliver new solutions. In essence, they will need a new enterprise “DNA” that gears the organization for speed, performance and innovation.

The Writing’s on the Well

Accenture's video shows that oil and gas companies need to reimagine who they are and what they do for operating at a lower cost. See more.

Pivoting wisely to the NEW

Valuable opportunities exist for oil and gas companies to capture returns across the energy landscape. To access them, we advocate three pivots:

From dominance to diversity: Growing demand for energy and new molecule applications will change how resources are sourced, managed and used. Oil and gas companies will need to diversify their energy assets and access.

From extracting energy to extracting value: Shifting the paradigm from “oil” to “energy” means re-imagining what oil and gas companies do and where they compete. It means pivoting away from the asset-heavy business models to embrace integrated, customer-centric energy models of the future.

From resources to relevance: Changing customer demands and behaviors are dictating the make-up of energy supplies, services and solutions. Placing customers at the center of upstream/downstream investment decisions is critical. Customer insights will inform the development of new, hyper-relevant services.

The days of focusing solely on extracting resources are over. The days of extracting value from new business models and changing customer behaviors have just begun.